CHARLES L. BOVE VS. AKPHARMA INC. (L-0982-15, ATLANTIC COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2342-17T3
CHARLES L. BOVE,
Plaintiff-Appellant, APPROVED FOR PUBLICATION
July 11, 2019
v.
APPELLATE DIVISION
AKPHARMA INC., a/k/a PRELIEF
INC. and ALAN E. KLIGERMAN,
Defendants-Respondents.
______________________________
Argued May 21, 2019 – Decided July 11, 2019
Before Judges Fisher, Suter and Enright.
On appeal from the Superior Court of New Jersey, Law
Division, Atlantic County, Docket No. L-0982-15.
Neil M. Mullin argued the cause for appellant (Smith
Mullin, PC, and Niedweske Barber LLC, attorneys;
Neil M. Mullin and Kevin Edward Barber, of counsel;
Nancy E. Smith, on the brief).
Roberto A. Rivera-Soto argued the cause for
respondents (Ballard Spahr LLP, attorneys; Roberto A.
Rivera-Soto and Casey Gene Watkins, of counsel and
on the brief).
Deborah Lynn Mains argued the cause for amicus
curiae New Jersey Association for Justice (Costello &
Mains, LLC, attorneys; Deborah Lynn Mains, on the
brief).
The opinion of the court was delivered by
ENRIGHT, J.S.C. (temporarily assigned).
Plaintiff, Charles L. Bove, appeals from an order granting summary
judgment to defendants, AkPharma Inc. and its CEO, Alan Kligerman, and
denying his motion to strike defendants' affirmative defense under the Workers'
Compensation Act (WCA), N.J.S.A. 34:15-1 to -146. Bove also appeals from
an order entering judgments for sanctions against his attorneys under Rule 1:4-
8. We affirm the two rulings granting summary judgment and denying Bove's
motion to strike, but reverse the order imposing sanctions.
In November 2013, Bove filed a workers' compensation claim and then in
August 2014, he filed a companion civil suit against AkPharma Inc. and
Kligerman. Both actions involved claims arising from Bove's use of a nasal
spray product called "NasoCell." Bove's civil complaint was dismissed without
prejudice so the parties could explore alternative dispute resolution, but when
attempts at settlement failed, Bove refiled his civil complaint in April 2015. In
his complaint, Bove alleged defendants were liable for fraudulent concealment,
battery, and prima facie tort, based on Bove's use of NasoCell. In response to
the refiled complaint, on May 5, 2015, defendants' counsel sent Bove's counsel
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a "safe harbor" letter, per Rule 1:4-8(b)(1). That letter made no mention of
Bove's separate workers' compensation petition nor the exclusivity bar under the
WCA. Instead, the letter generally indicated Bove's factual allegations about
his use of NasoCell were contrary to the evidence and that there was no scientific
evidence linking his alleged injuries to NasoCell. The "safe harbor" letter also
contended Bove's legal claims were contrary to New Jersey law and were
"governed exclusively by the New Jersey Product Liability Act" (PLA), N.J.S.A.
2A:58C-1 to -11. In response to this letter, Bove's counsel filed an amended
complaint, outlining five causes of action, namely, fraudulent concealment,
battery, prima facie tort, strict products liability/design defect, and strict
liability/failure to warn.
In July 2015, defendants moved to dismiss the amended complaint or,
alternatively, for summary judgment based on the WCA bar. On April 19, 2016,
the court dismissed the prima facie tort action, denied dismissal as to the other
counts and denied, without prejudice, defendants' motion for summary
judgment. Shortly thereafter, the trial court ordered discovery limited to the
application of the WCA litigation bar. In October 2016 and March 2017,
supplemental orders were entered to extend discovery and to allow Bove's
counsel time to engage a scientific expert.
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In June 2017, Bove filed a motion to strike defendants' affirmative defense
of the WCA's litigation bar. Defendants opposed this motion and renewed their
request for summary judgment. The trial court then conducted a five-day
evidentiary hearing in July 2017, to determine whether Bove could proceed with
his civil suit or was barred from doing so under the WCA. The trial court heard
testimony from Bove, Kligerman, and their respective experts during this
hearing.
On August 4, 2017, the trial court denied Bove's motion to strike
defendants' affirmative defense of the WCA's litigation bar and granted
defendants' motion for summary judgment. Defendants then timely moved for
a frivolous litigation award, seeking reimbursement in the sum of $702,819.87
for counsel fees, costs and expert fees. On December 13, 2017, the trial court
partially granted defendants' request for sanctions and entered judgments against
Bove's attorneys amounting to $205,147.82. Each firm representing Bove was
directed to pay half of this award.
Bove appeals from the August 4, 2017 and December 13, 2017 orders.
The New Jersey Association for Justice (NJAJ) joins in his appeal, as amicus
curiae.
The two opinions accompanying the orders at issue reflect extensive fact-
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findings, which we need not repeat here. Instead, we highlight only those facts
salient to our analysis and note the trial court accurately captured the testimony
of the parties and their experts, including the error committed by Bove's expert
in misreading the content and meaning of a Food & Drug Administration (FDA)
public notice about "Nasal Moisturizer Drug Products."
According to the testimony from the evidentiary hearing, Bove was hired
by Kligerman in 2003 on a part-time basis. Soon, he became a full-time
employee and the Director of Clinical Studies at AkPharma. By 2007, he was
engaged in discussions with Kligerman about NasoCell, the nasal spray product
Kligerman had developed. NasoCell was comprised of calcium
glycerophosphate (CGP) and distilled water. Kligerman used this product
personally and decided to put the mixture into a spray bottle. He claimed
NasoCell helped him with his asthma and that several of his family members
also used NasoCell.
The testimony from the evidentiary hearing confirms Kligerman
suggested Bove and other AkPharma employees use NasoCell spray. It is
uncontroverted that some employees declined to use NasoCell but Bove agreed
to try it. He used NasoCell from 2007 to as late as 2010, documented the effects
he observed while using this product, and submitted his observations to
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Kligerman. The record reflects Bove often used NasoCell outside the workplace
and in his home, and he provided many positive reviews about his use of
NasoCell.
When NasoCell's ingredients were modified and the product became
known as "NasoCell-S," Bove continued to use this modified product. The
record shows Bove's use of NasoCell-S was unsupervised, except on one
occasion when Bove testified he felt pressured to use the product because
Kligerman followed him into a bathroom at work to watch him use it. However,
on cross-examination, Bove conceded "nobody had a gun to (his) head" to use
the product and he "did it for Alan (Kligerman)." The record also reflects that
in January 2008, Bove completed a survey at work, advising he wanted to
continue to be a panelist to study NasoCell and to receive another bottle of the
spray. Bove was unsure when he stopped using NasoCell, but did not believe
he used it after defendants received a "full clinical hold letter" from the FDA in
2010, testifying, "I pretty much washed my hands of it after that."
For his part, Kligerman denied pressuring Bove at any time to use
NasoCell and testified Bove was enthusiastic about the product. Kligerman also
testified he personally used NasoCell several times a week, starting in 2007, and
as of the time of the evidentiary hearing, he and his family members continued
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to use NasoCell on a regular basis with no negative effects. Kligerman was
unwavering in his testimony that NasoCell was safe and that Bove voluntarily
used the product. Further, there was no evidence presented at the hearing of any
adverse action taken against Bove or other employees at AkPharma who
declined to use NasoCell or started but then stopped using NasoCell.
In August 2010, AkPharma received a full clinical hold letter from the
FDA, essentially placing a hold on any further clinical study of NasoCell as a
drug until certain stated deficiencies were cured. There is no dispute Bove knew
NasoCell did not have FDA approval before he used the product. Concerned
about incurring additional expenses, AkPharma discontinued development of
NasoCell as a drug and explored its development as a cosmetic. However,
NasoCell never got past the early planning and development stage, it was not
marketed to the public, and ultimately, it was abandoned by defendants
altogether.
In 2011, AkPharma terminated Bove and other employees as part of a
workforce reduction. Then, in 2013, Bove was diagnosed with permanent
endocrine failure and a colon tumor. Following these diagnoses, Bove
researched the ingredients that had been used in NasoCell, such as CGP and
parabens, and concluded his use of NasoCell had caused his health problems.
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He also asserted a number of medical professionals had connected his use of
NasoCell to his ailments, but did not present any reports to support this
contention.
Based on these facts, the trial court granted defendants summary judgment
in August 2017, finding Bove did not "vault" the exclusivity provision of the
WCA. It explained Bove's proofs did not show that: (1) Kligerman knew his
actions were substantially certain to result in injury or death to plaintiff; or (2)
Bove's injuries and the circumstances of their infliction were more than a fact
of life of industrial employment and beyond what the Legislature intended the
WCA to immunize. The trial judge also stated that as AkPharma's Clinical
Studies Manager, Bove's "involvement in the early stages of new products was
apparently part of his duties." The trial judge found Bove: used NasoCell at
work and at home; he made positive findings regarding its effectiveness; and
then ceased using it, years prior to his initial workers' compensation petition.
Moreover, the trial court noted that several years after Bove stopped using
NasoCell, he had no medical evidence to support his claim that NasoCell caused
his health problems.
On the other hand, the trial court found Kligerman "was, and remains,
very confident of the safety of the conduct he asked plaintiff to engage in. Not
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only has [Kligerman] used NasoCell regularly for the past several years, he has
encouraged his family members to do so." Based on these and other
observations, the trial judge concluded that "[s]uch are not the circumstances to
support a civil claim for personal injuries by an employee against an employer"
and there is no basis to waive the "cloak of immunity afforded an employer
under the WCA." Additionally, the trial court determined "there are no facts in
dispute that might support a finding by a reasonable jury that AkPharma knew
with virtual certainty that Mr. Bove had been required to engage in conduct that
would be harmful to him," adding, "the evidence is so one-sided that it is
inconceivable that a jury would find that [d]efendant was substantially certain
that [p]laintiff would suffer harm from his use of NasoCell." Thus, the trial
court granted summary judgment in defendants' favor.
We review the trial court's decision granting summary judgment de novo,
using the identical standard that governs the trial court. Townsend v. Pierre,
221 N.J. 36, 59 (2015). We owe no deference to the motion judge's conclusions
on issues of law. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140
N.J. 366, 378 (1995). Additionally, we review the record "based on our
consideration of the evidence in the light most favorable to the parties opposing
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summary judgment." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523
(1995).
Rule 4:46-2(c) provides that a court should grant summary judgment when
"the pleadings, depositions, answers to interrogatories and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any
material fact challenged and that the moving party is entitled to a judgment or
order as a matter of law." Thus, a summary judgment motion should be denied
if the non-moving party comes forward with evidence that reflects a "genuine
issue as to any material fact challenged." Brill, 142 N.J. at 529.
A summary judgment motion is not defeated simply by pointing to any
fact in dispute. Ibid. Also, self-serving assertions unsupported by evidence are
"insufficient to create a genuine issue of material fact." Miller v. Bank of Am.
Home Loan Servicing, L.P., 439 N.J. Super. 540, 551 (App. Div. 2015) (quoting
Heyert v. Taddese, 431 N.J. Super 388, 414 (App. Div. 2013)). "Competent
opposition requires 'competent evidential material' beyond mere 'speculation'
and 'fanciful arguments.'" Hoffman v. Asseenontv.Com, Inc., 404 N.J. Super.
415, 426 (App. Div. 2009) (quoting Merchs. Express Money Order Co. v. Sun
Nat'l Bank, 374 N.J. Super. 556, 563 (App. Div. 2005)).
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Bove argues he presented sufficient evidence that defendants acted with
intent to commit battery and fraud, which acts should have allowed him to
"vault" the exclusivity bar under the WCA. He also complains it was error for
the trial court to obligate him to submit expert testimony or medical records
regarding proximate cause in light of the limited scope of discovery ordered
before the plenary hearing. Additionally, he complains the trial court should not
have considered the expert testimony of Dr. Margaret Weis, due to her financial
interest in defendants' business.
The WCA compensates employees for personal injuries caused "by
accident arising out of and in the course of employment[.]" N.J.S.A. 34:15 -7.
It authorizes benefits "irrespective of the fault of the employer or contributory
negligence and assumption of risk of the employee." Harris v. Branin Transp.,
Inc., 312 N.J. Super. 38, 46 (App. Div. 1998). The WCA has been described by
our Supreme Court "as an historic 'trade-off.'" Laidlow v. Hariton Mach. Co.,
Inc., 170 N.J. 602, 605 (2002). By implied agreement, employees volunteer to
give up their right to pursue common law remedies for work-related injuries and
illnesses, in return for an automatic entitlement to a limited recovery. Ibid. See
N.J.S.A. 34:15-1 to -146. Similarly, the employer accepts strict liability for
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workplace injuries in return for limited and definite financial exposure. The
exclusive remedy provision of the WCA states:
If an injury or death is compensable under this article,
a person shall not be liable to anyone at common law or
otherwise on account of such injury or death for any act
or omission occurring while such person was in the
same employ as the person injured or killed, except for
intentional wrong.
[N.J.S.A. 34:15-8.]
The statutory language of the WCA involving an exception for intentional
wrongs was added in 1961. The Sponsor's Statement accompanying the
amendment explained, in part:
The bill seeks to prevent common law actions by
representatives of the injured person against the
employer even though the injured person is receiving
or is entitled to receive the benefits under the
Workmen's Compensation Act by specifically limiting
the employer's liability to the provisions of the act.
This bill also seeks to protect a workman from the
threat of suit or from actual suit in situations where the
remedy should be obtained from the employer through
workmen's compensation alone, since there is a
growing trend whereby a workman, after receiving
benefits under the Worker's Compensation Act, then
starts a common law suit against his fellow workers,
superintendent or foreman, or against the officers and
directors of the company for whom he worked, thus
exposing them to the expense of having to defend such
suits and the possibility of having to pay substantial
damages.
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[Sponsor's Statement to A. 277 7 (L. 1961, c. 2).]
The legislative history of the WCA does not specifically explain why the
phrase, "intentional wrong," was included in the Act, as opposed to "intentional
tort." Nonetheless, it appears the first definition of "intentional wrong," was
referenced in Bryan v. Jeffers, 103 N.J. Super. 522, 523-24 (App. Div. 1968),
where we said our Legislature intended the words, "intentional wrong," to have
"their commonly understood signification of deliberate intention." Ibid. Thus,
we found the "policy objective sought by the 1961 amendment would not be
attained if the exception for 'intentional wrong' were construed to leave open a
loophole for such actions against fellow employees in the guise of claims for
'gross negligence.'" Id. at 523. See also Millison v. E.I. du Pont de Nemours &
Co., 101 N.J. 161, 171 (1985) (holding that a defendant does not engage in an
intentional wrong when he is negligent by acting in the belief or consciousness
that the act is causing an appreciable risk of harm to another or when the
defendant is acting recklessly or wantonly facing an even greater risk).
Accordingly, the phrase, "intentional wrong," has been given a narrow
construction. Copeland v. Johns-Manville Prods. Corp., 492 F. Supp. 498, 501
(D.N.J. 1980).
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The intentional wrong exception to the exclusivity bar under the WCA
was analyzed by our Supreme Court in Millison, 101 N.J. at 181-82, where the
Court found an employer fraudulently concealed employees were suffering from
asbestos-related diseases (thereby delaying treatment and aggravating their
existing illnesses). The Millison Court determined such behavior constituted an
intentional wrong under the WCA. Still, the Court recognized that:
the statutory scheme contemplates that as many work-
related disability claims as possible be processed
exclusively within the Act. Moreover, if "intentional
wrong" is interpreted too broadly, this single exception
would swallow up the entire "exclusivity" provision of
the Act, since virtually all employee accidents, injuries,
and sicknesses are a result of the employer or a co-
employee intentionally acting to do whatever it is that
may or may not lead to eventual injury or disease.
[Id. at 177.]
The Millison Court emphasized the concept of "intentional wrong"
encompassed more than a subjective intention to injure. In considering what
level of risk and exposure to danger was "so egregious as to constitute an
'intentional wrong,'" the Court concluded that mere knowledge and appreciation
of a risk of harm to an employee cannot be considered intent. Ibid. It then
adopted a "substantial certainty" standard to establish the commission of an
intentional wrong. Id. at 178. Under that standard, the Court held a plaintiff
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had to establish two elements: (1) the employer must knowingly expose the
employee to a substantial certainty of injury (i.e., the "conduct" prong); and (2)
the resulting injury must not be "a fact of life of industrial employment," and
must be "plainly beyond anything the legislature" intended the Act to immunize
(i.e. the "context" prong). Id. at 178-79. The substantial-certainty standard will
be met only if "both prongs . . . are proved." Laidlow, 170 N.J. at 605. The
Millison Court clarified that whenever an employer is a corporation, "the
employer can act only through its employees, so for practical purposes, actions
taken by certain corporate officers and supervisors are actions taken by the
corporate-employer." Millison, 101 N.J. at 185.
The Laidlow Court reiterated the substantial-certainty standard when it
examined the intentional wrong exception in the context of an industrial
accident. Laidlow, 170 N.J. at 608. The Court held the employer in Laidlow
acted with knowledge it was substantially certain a worker would suffer an
injury when an employee tied a safety guard on a rolling mill, releasing it only
when Occupational Safety and Health Administration (OSHA) inspectors were
present, and although no injuries had occurred in the past, there had been several
close calls reported to the employer. Id. at 620-22. The Court concluded an
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employee injury under these circumstances would never constitute the "simple
facts of industrial life." Id. at 622.
More recently, in Van Dunk v. Reckson Associates Realty Corp., 210 N.J.
449, 474 (2012), our Supreme Court held the WCA's exclusivity bar applied,
even though the workplace accident produced an OSHA citation for a "willful"
violation of OSHA safety rules. In that case, the plaintiff, a construction worker,
was injured when a trench collapsed on him at his worksite. Id. at 454. The
unsupported trench was excavated too deeply for a worker to safely enter
without safety equipment, according to OSHA safety rules, as well as the
employer's own safety program. Id. at 454. Still, the Van Dunk Court held "that
the finding of a willful violation under OSHA is not dispositive of the issue of
whether the employer in this case committed an intentional wrong." Id. at 470.
As to the conduct prong of the substantial-certainty standard, the Court
explained that "[a] probability, or knowledge that [ ] injury or death 'could'
result, is insufficient." Ibid. Instead, the "intentional wrong must amount to a
virtual certainty that bodily injury or death will result." Ibid. Moreover, as to
the context prong, the Court observed the "high threshold" of this prong was not
met by "the type of mistaken judgment by the employer and ensuing employee
accident that occurred on [the] construction site." Id. at 474. In short, the Van
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Dunk Court found that while the knowing failure to take safety precautions was
an "exceptional wrong," it was not the type of egregious conduct associated with
an intentional wrong. Id. at 472.
Reviewing these cases together, it is apparent that in addition to violations
of safety regulations or failure to follow good safety practice, an intentional
wrong will be found when it is accompanied by something more, such as
deception, affirmative acts that defeat safety devices, or a willful failure to
remedy past violations. See Laidlow, 170 N.J. at 616 (noting that the "mere
toleration of workplace hazards 'will come up short' of substantial certainty")
(quoting Millison, 101 N.J. at 179). As the Van Dunk Court observed when
discussing the conduct prong analysis, "[w]hat distinguishes Millison, Laidlow,
Crippen [v. Cent. Jersey Concrete Pipe Co., 176 N.J. 397, 409-10 (2003)] and
Mull [v. Zeta Consumer Products, 176 N.J. 385, 192 (2003)] from the present
matter is that those cases all involved the employer's affirmative action to
remove a safety device from a machine, prior OSHA citations, deliberate deceit
regarding the condition of the workplace, machine, or, in the case of Millison,
the employee's medical condition, knowledge of prior injury or accidents, and
previous complaints from employees." Van Dunk, 210 N.J. at 471.
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This case is in sharp contrast to the types of cases cited by the Van Dunk
Court. Here, Bove asserts defendants were not entitled to summary judgment,
as they committed battery, by repeatedly requiring him to inhale NasoCell, and
fraud, by falsely conveying to him that all ingredients in NasoCell were safe.
However, his mere allegations of battery or fraud do not automatically vault the
WCA exclusivity bar. Even "conduct that would be considered reckless or
intentional under general tort law may result in injuries covered by the WCA[.]"
Vitale v. Schering-Plough Corp., 447 N.J. Super. 98, 115 (App. Div. 2016), aff'd
as modified, 231 N.J. 234 (2017).
What is more, the elements of an "intentional wrong" are not coextensive
with the elements of common law intentional torts, such as battery and fraud.
For example, a battery claim may be asserted based on "any nonconsensual
touching" and does not require intent to injure. Perna v. Pirozzi, 92 N.J. 446,
459-65 (1983). Thus, not all battery claims by an employee against his or her
employer will satisfy the first prong of the Millison standard.
Here, Bove's proofs did not show Kligerman either physically touched him
or used his authority and power to force Bove to use NasoCell. Instead, Bove
admitted to using NasoCell at work and at home and on cross-examination, he
conceded no one "forced" him to use NasoCell. Bove also acknowledged he
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participated in the study "for Alan (Kligerman)," and Kligerman never said "if
you don't try it, you're going to lose your job." Moreover, in 2008, after having
used NasoCell repeatedly and aware it had not been approved by the FDA, Bove
signed a form indicating he wanted to continue as a panelist in studying the
effects of NasoCell and wanted another bottle of NasoCell. The proofs similarly
confirmed, without contradiction, that Bove continued to be employed by
defendants after he stopped using NasoCell, and that other employees who
declined to use or stopped using NasoCell suffered no negative repercussions
from defendants. Further, Kligerman used NasoCell before he asked Bove to
try it and Kligerman used NasoCell long after Bove stopped using the product.
As the trial court noted, these were not the type of circumstances demonstrating
Kligerman was "substantially certain" that injury or death would be suffered by
Bove from using NasoCell.
Turning to Bove's claim of fraud, he had to prove: "(1) a material
misrepresentation of a presently existing or past fact; (2) knowledge or belief by
the defendant of its falsity; (3) an intention that the other person rely on it; (4)
reasonable reliance thereon by the other person; and (5) resulting damages."
Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997). As correctly
determined by the trial judge, no fraud was committed in this instance because
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no material misrepresentation was made—the ingredients in NasoCell were
generally regarded as safe and were not among the FDA's list of unsafe cosmetic
ingredients. Bove presented no evidence to the contrary. Moreover, the trial
court's determination that Kligerman was, and remains, very confident in the
safety of NasoCell was overwhelmingly supported by the record. Indeed, it was
uncontroverted Kligerman and his family members used NasoCell for years,
with no injuries reported from its use.
While Bove sought to equate defendants' intentional acts to the more
egregious acts referenced by the Van Dunk Court, we find the trial court's
rejection of his claims amply supported by the record. That is to say, we find
no error in its analysis of the conduct prong under Millison regarding defendants'
acts, for purposes of exposure to a civil suit.
To the extent Bove complains the trial court erred when citing to his
failure to provide medical causation testimony, we disagree. Indeed, the first
prong of the two-prong substantial certainty test articulated in Millison confirms
an employer must know its actions are "substantially certain" to result in injury
or death to the employee. Millison, 101 N.J. at 178-79. Thus, if a plaintiff
cannot demonstrate the employer was aware the conduct at issue was
substantially certain to result in injury, that plaintiff cannot satisfy the first prong
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of Millison. Bove was properly held to this same standard by the trial court .
However, his proofs fell far short of satisfying the conduct prong, as he
presented no evidence to support his contention defendants were substantially
certain his use of NasoCell would result in injury or death. Moreover, Bove
provided no proofs his alleged injuries resulted from defendants' actions. On
the other hand, defendants addressed the conduct prong and presented evidence
the ingredients in NasoCell were generally regarded as safe by the FDA and that
the use of such ingredients in consumer products was widespread. Additionally,
they presented expert testimony accepted by the trial court that it was highly
unlikely NasoCell's ingredients caused any of the ailments complained of by
Bove. Thus, we are satisfied that when the trial court mentioned Bove's lack of
medical proofs, it did so, cognizant of its central inquiry, i.e., whether
defendants were substantially certain death or injury would result from Bove's
use of NasoCell.
We note that whether NasoCell was a cosmetic or a drug while Bove used
the product was extensively addressed by the parties' experts. However, a
review of the lengthy expert testimony provided on this issue was of little
assistance to us in resolving whether defendants "knowingly exposed plaintiff
to a substantial certainty of injury," i.e., the first prong of the Millison standard.
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Millison, 101 N.J. at 178-79. At any rate, we find no error in the trial court's
assessment of how defendants developed and then abandoned NasoCell before
it could be marketed as a drug or cosmetic. Similarly, the record supports the
trial court's conclusion that Bove's own expert erred in relying on a
misunderstanding of the FDA's 2003 "Call for Data," in an effort to support
Bove's claims of defendants' liability for intentional wrongs.
As there was no evidence to suggest defendants were substantially certain
death or injury would result from Bove's use of NasoCell, it is unnecessary to
analyze the second prong of the "substantial certainty" standard, i.e. the resulting
injury must not be a "fact of life of industrial employment" and must be plainly
beyond anything the Legislature intended the WCA to immunize. Millison, 101
N.J. at 178-79. We do not address this context prong because, again, the
exclusivity bar of the WCA will only be vaulted if both the conduct and context
prongs are proven. Laidlow, 170 N.J. at 605. Additionally, we are satisfied
there is no likelihood further discovery would "supply the missing elements of
the cause of action" to vault the WCA's exclusivity bar. Badiali v. N.J. Mfrs.
Ins. Grp., 220 N.J. 544, 555 (2015). Therefore, we find no error in the trial
court's decision to grant defendants summary judgment, notwithstanding Bove's
assertions that defendants committed "intentional wrongs" against him.
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Next, we turn to the award of sanctions against plaintiff's counsel. We
review the trial judge's decision on a motion for frivolous lawsuit sanctions
under an abuse of discretion standard. McDaniel v. Man Wai Lee, 419 N.J.
Super. 482, 498 (App. Div. 2011). Reversal is warranted "only if [the decision]
'was not premised upon consideration of all relevant factors, was based upon
consideration of irrelevant or inappropriate factors, or amounts to a clear error
in judgment.'" Ibid. (quoting Masone v. Levine, 382 N.J. Super. 181, 193 (App.
Div. 2005)). Governed by these standards, and mindful of Bove's failure to
marshal proofs sufficient to vault the exclusivity bar under the WCA, we reverse
the sanctions imposed on Bove's counsel. We do so because the trial court did
not fully appreciate the temporal limitation associated with such sanctions and
because defendants' "safe harbor" letter of May 5, 2015 neglected to warn Bove
that his action was barred by the WCA. Additionally, there was no finding as
to whether Bove's counsel held an objectively reasonable belief in the merits of
Bove's claims. Accordingly, we reverse the sanctions against Bove's attorneys
on these bases.
Sanctions for frivolous litigation against a party are governed by the
Frivolous Litigation Statute, N.J.S.A. 2A:15-59.1. See also Rule 1:4-8
(authorizing similar fee-shifting consequences as to frivolous litigation conduct
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by attorneys). N.J.S.A. 2A:15-59.1 and Rule 1:4-8 provide limited exceptions
to the "American Rule" for civil justice, whereby litigants are expected to bear
their own counsel fees. Our courts traditionally have adhered strictly to the
American Rule because "sound judicial administration will best be advanced by
having each litigant bear his own counsel fees." First Atlantic Federal Credit
Union v. Perez, 391 N.J. Super. 419, 425 (App. Div. 2007) (citing Gerhardt v.
Continental Ins. Co., 48 N.J. 291, 301(1966)). As a consequence, we have
approached fee-shifting requests under the Frivolous Litigation Statute and Rule
1:4-8 restrictively, because "the right of access to the court should not be unduly
infringed upon, honest and creative advocacy should not be discouraged, and
the salutary policy of the litigants bearing, in the main, their own litigation costs,
should not be abandoned." Gooch v. Choice Entertaining Corp., 355 N.J. Super.
14, 18 (App. Div. 2002) (citation omitted).
Under the Frivolous Litigation Statute, a court is permitted to award
reasonable attorney's fees and litigation costs to a prevailing party in a civil
action if the court finds "at any time during the proceedings or upon judgment
that a complaint, counterclaim, cross-claim or defense of the non-prevailing
person was frivolous." N.J.S.A. 2A:15-59.1(a)(1). Similarly, Rule 1:4-8
provides for the imposition of sanctions where an attorney or pro se party filed
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a pleading or a motion with an "improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of litigation[,]" Rule 1:4-
8(a)(1), or by asserting a claim or defense that lacks the legal or evidential
support required by Rule 1:4-8(a)(2), (3) and (4). State v. Franklin Sav. Account
No. 2067, 389 N.J. Super. 272, 281 (App. Div. 2006).
"For purposes of imposing sanctions under Rule 1:4-8, an assertion is
deemed 'frivolous' when 'no rational argument can be advanced in its support,
or it is not supported by any credible evidence, or it is completely untenable.'"
United Hearts, LLC v. Zahabian, 407 N.J. Super. 379, 389 (App. Div. 2009)
(quoting First Atlantic, 391 N.J. Super. at 432).
Sanctions imposed under this rule "are specifically designed to deter the
filing or pursuit of frivolous litigation[.]" LoBiondo v. Schwartz, 199 N.J. 62,
98 (2009). A second purpose of the rule is to compensate the opposing party in
defending against frivolous litigation. Toll Bros., Inc. v. Twp. of W. Windsor,
190 N.J. 61, 71 (2007). However, because the nature of litigation conduct
warranting sanctions under Rule 1:4-8 has been strictly construed, Pressler &
Verniero, Current N.J. Court Rules, cmt. 2 on R. 1:4-8 (2019), Rule 1:4-8
sanctions will not be imposed against an attorney who mistakenly files a claim
in good faith. Horowitz v. Weishoff, 346 N.J. Super. 165, 166-67 (App. Div.
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25
2001); see also First Atlantic, 391 N.J. Super. at 432 (holding that an objectively
reasonable belief in the merits of a claim precludes an attorney fee award); and
K.D. v. Bozarth, 313 N.J. Super. 561, 574-75 (App. Div. 1998) (declining to
award attorney's fees where there is no showing the attorney acted in bad faith).
"That some of the allegations made at the outset of litigation later proved to be
unfounded does not render frivolous a complaint that also contains some non -
frivolous claims." Iannone v. McHale, 245 N.J. Super. 17, 32 (quoting Romero
v. City of Pomona, 883 F. 2d 1418, 1429 (9th Circ. 1989)); see also Wyche v.
Unsatisfied Claim & Judgment Fund, 383 N.J. Super. 554, 560 (App. Div. 2006)
(finding fees properly denied where plaintiff was legitimately seeking to extend
the law on a theretofore undecided issue).
Rule 1:4-8 provides that the signature of an attorney or pro se party on a
"pleading, written motion, or other paper" certifies that to the best of his or her
knowledge, information, and belief, formed after an inquiry reasonable under
the circumstances:
(1) the paper is not being presented for any improper
purpose, such as to harass or to cause unnecessary delay
or needless increase in the cost of litigation;
(2) the claims, defenses, and other legal contentions
therein are warranted by existing law or by a non-
frivolous argument for the extension, modification, or
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26
reversal of existing law or the establishment of new
law;
(3) the factual allegations have evidentiary support or,
as to specifically identified allegations, they are either
likely to have evidentiary support or they will be
withdrawn or corrected if reasonable opportunity for
further investigation or discovery indicates insufficient
evidentiary support; and
(4) the denials of factual allegations are warranted on
the evidence or, as to specifically identified denials,
they are reasonably based on a lack of information or
belief or they will be withdrawn or corrected if a
reasonable opportunity for further investigation or
discovery indicates insufficient evidentiary support.
[R. 1:4-8(a).]
Strict compliance with each procedural requirement of Rule 1:4-8 is "a
prerequisite to recovery[,]" and failure to conform to the rule's procedural
requirements will result in a denial of the request for an attorney's fees sanction.
Franklin Sav. Account No. 2067, 389 N.J. Super. at 281. For example, a
frivolous litigation motion must be filed "no later than [twenty] days following
the entry of final judgment." R. 1:4-8(b)(2). Also, subsection (b)(1) of Rule
1:4-8 requires a party seeking frivolous litigation sanctions to "file a separate
motion [for the sanction] describing the specific conduct alleged to be a
violation of the Rule." Toll Bros., 190 N.J. at 69. Prior to filing such a motion,
the litigant seeking the sanction must "serve a written notice and demand on the
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27
attorney or pro se party, which must include a request that the allegedly frivolous
paper [or pleading] be withdrawn." Ibid. This notice is generally referred to as
a "safe harbor" notice. Ibid. The notice must "set [] forth 'with specificity' the
basis for his or her belief that the pleading is frivolous. The notice must be
sufficiently specific and detailed to provide an opportunity to 'withdraw the
assertedly offending pleadings.'" Ferolito v. Park Hill Ass'n, 408 N.J. Super.
401, 408 (App. Div. 2009) (quoting Trocki Plastic Surgery Ctr. v. Bartkowski,
344 N.J. Super. 399, 406 (App. Div. 2001)). See R. 1:4-8(b)(1)(i)-(ii). As we
have stated:
In the context of a claim against a party who is
represented, a proper notice and demand . . . serves the
additional benefit of bringing the weakness of the claim
to the attention of a client who is presumably acting on
the advice of the attorney. In contrast, a notice and
demand articulating an objection on one legal theory
does not serve to alert the client or the attorney to other
weaknesses. Consequently, a prevailing party's
obligation to give proper notice as a condition of
recovering an award of fees and costs is not fulfilled by
a notice that alerts a party to the frivolous nature of a
different claim. The purpose of the notice and demand
is to inform, not distract and confuse.
[Ferolito, 408 N.J. Super. at 409.]
Additionally, in order to ensure Rule 1:4-8 does not become another
routine method for awarding attorney's fees, "the Rule imposes a temporal
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limitation on any fee award, holding that reasonable fees may be awarded only
from that point in the litigation at which it becomes clear that the action is
frivolous." LoBiondo, 199 N.J. at 99 (citing DeBrango v. Summit Bancorp, 328
N.J. Super. 219, 229-30 (App. Div. 2000)); see also United Hearts, 407 N.J.
Super. at 395 (reversing sanctions against an attorney where trial court allowed
case to survive summary judgment and proceed to trial, thus precluding findings
of frivolous pleading or bad-faith litigation).
Subsection (f) of Rule 1:4-8, titled "Applicability to Parties," provides that
"[t]o the extent practicable, the procedures prescribed by this rule shall apply to
the assertion of costs and fees against a party other than a pro se party pursuant
to N.J.S.A. 2A:15-59.1." Thus, a litigant moving for counsel fees and costs
pursuant to N.J.S.A. 2A:15-59.1 is required to comply with Rule 1:4-8(b)(1)'s
safe harbor provision, but only "[t]o the extent practicable." R. 1:4-8(f).
By statute, a pleading is "frivolous" if:
(1) The complaint, counterclaim, cross-claim or
defense was commenced, used or continued in bad
faith, solely for the purpose of harassment, delay or
malicious injury; or
(2) The non-prevailing party knew, or should have
known, that the complaint, counterclaim, cross-claim or
defense was without any reasonable basis in law or
equity and could not be supported by a good faith
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argument for an extension, modification or reversal of
existing law.
[N.J.S.A. 2A:15-59.1(b)(1)-(2).]
Just like Rule 1:4-8, the Frivolous Litigation Statute is interpreted
restrictively. DeBrango, 328 N.J. Super. at 226. Sanctions should be awarded
only in exceptional cases. Fagas v. Scott, 251 N.J. Super. 169, 181 (Law Div.
1991).
"'[T]he burden of proving that the non-prevailing party acted in bad faith'
is on the party who seeks fees and costs pursuant to N.J.S.A. 2A:15-59.1."
Ferolito, 408 N.J. Super. at 408 (alteration in original) (quoting McKeown-
Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 559 (1993)). When a
prevailing party's allegation is based on an assertion that the non-prevailing
party's claim lacked "a reasonable basis in law or equity," and the non-prevailing
party is represented by an attorney, "an award cannot be sustained if the '[non-
prevailing party] did not act in bad faith in asserting' or pursuing the claim."
Ibid. (quoting McKeown-Brand, 132 N.J. at 549). As we stated:
The rationale for requiring proof of bad faith is that
clients generally rely on their attorneys "to evaluate the
basis in law or equity of a claim or defenses," and "a
client who relies in good faith on the advice of counsel
cannot be found to have known that his or her claim or
defense was baseless."
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[Ibid. (quoting McKeown-Brand, 132 N.J. at 557-58).]
"When the [non-prevailing party's] conduct bespeaks an honest attempt to
press a perceived, though ill-founded and perhaps misguided, claim, he or she
should not be found to have acted in bad faith." Belfer v. Merling, 322 N.J.
Super. 124, 144-45 (App. Div. 1999). "Thus, a grant of a motion for summary
judgment in favor of a [prevailing party], without more, does not support a
finding that the [non-prevailing party] filed or pursued the claim in bad faith."
Ferolito, 408 N.J. Super. at 408. Where the pleading party had an objectively
reasonable and good faith belief in the merits of the claim, attorney's fees will
not be awarded. First Atlantic, 391 N.J. Super. at 433.
Of course, litigation may become frivolous, and therefore sanctionable,
by continued litigation over a meritless claim, even if the initial pleading was
not frivolous or brought in bad faith. DeBrango, 328 N.J. Super. at 226. This
is because the "requisite bad faith or knowledge of lack of well-groundedness
may arise during the conduct of the litigation." United Hearts, 407 N.J. Super.
at 390 (citation omitted).
Here, the trial court itself declared at the outset of its opinion of August
4, 2017 that "[t]his litigation arises out of circumstances that are sui generis."
In its December 13, 2017, it further acknowledged Bove's contentions had "merit
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in the abstract," and that discovery afforded Bove the chance to gather evidence
based upon credible science and to engage a scientific expert. Nonetheless, the
motion judge found Bove's complaint "was frivolous as defined in both [Rule]
1:4-8, and N.J.S.A. 1A:15-59.1, and that plaintiff's counsel [was] obligated
under [the] Court Rules for payment of counsel fees to defendants." The trial
court declined to award sanctions against Bove, finding he did not act in bad
faith nor should he have known his complaint "was without a reasonable basis
in law or equity." However, the trial court specifically determined Bove's
complaint should have been withdrawn when he received defendants' "safe
harbor" letter, or, alternatively, his counsel should have investigated whether his
claims had merit. The trial judge stated:
How plaintiff's counsel could proceed for another 19
months without retaining an expert bespeaks a lack of
appreciation for the issues raised by the Complaint and
defendants' "safe harbor" letter. Had plaintiff's counsel
informed the [c]ourt that he wished an initial period to
consult with a scientific expert, such time would have
been granted. But no such request was made.
That would have been the prudent course because
[plaintiff's counsel] needed to determine whether he
could prove: (a) that plaintiff did indeed suffer injury;
(b) that plaintiff's injuries were directly linked to his
exposure to NasoCell[ ]; and (c) that [Kligerman] knew
with "substantial certainty" that [plaintiff] would be
injured. In lieu of focusing on a coherent explanation
of how NasoCell[ ] caused plaintiff's alleged injuries,
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this litigation continued for more than [two] years;
resulted in significant expense to the parties; and
plaintiff never produced a single piece of evidence to
support his contention that he was injured, that
defendants were the cause of the injury, or that
defendants committed an intentional wrong, thereby
vaulting the WCA litigation bar. Equally puzzling to
the [c]ourt is the history of the plaintiff's WCA claim
which has been pending for more than four years,
wherein plaintiff has repeatedly cancelled [independent
medical examinations] scheduled by defendants and
has yet to proffer proofs in support of the WCA
Petition.
The motion judge also pointed out that prior to the evidentiary hearing, he
warned Bove's counsel that he would "not hesitate to award counsel fees when
a proper Rule 1:4-8 letter had been served, and a claim is found to be meritless."
We note, however, that defendants' Rule 1:4-8 "safe harbor" letter did not raise
the issue that Bove lost on following the evidentiary hearing—the WCA
exclusive remedy bar. Notwithstanding the defendants' failure to mention the
WCA exclusivity bar in its "safe harbor" letter, the trial court found Bove's
attorneys continued to pursue Bove's claims, even though no "credible, tangible"
evidence was presented to show defendants knew, with substantial certainty,
Bove would be injured from his use of NasoCell and Bove, in fact, was injured
by defendants' actions.
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The trial court then analyzed defense counsel's affidavit of services and
calculated a "lodestar figure," for what he deemed a reasonable fee, consistent
with Rendine v. Pantzer, 141 N.J. 292 (1995). See also R. 1:4-8(b)(2) and R.
4:42-9(b) and (c) (allowing for an award based on reasonable expenses and fees
as detailed in an affidavit of services). Rather than simply accepting the figure
presented by defendants, the trial court carefully scrutinized defense counsel's
billing entries, the hourly rate of defendants' lead counsel, and defendants'
request for reimbursement of expenses, including expert witness fees, before
adjusting the amount of the award to a figure it deemed reasonable.
Notwithstanding the trial court's painstaking analysis, we find it erred by
awarding sanctions against Bove's counsel, without accounting for the temporal
limitation governing such an award. Certainly, when the court issued its order
of April 19, 2016, initially denying defendants' motion for summary judgment,
the date of that order provided a "cut-off" date and sanctions should not have
been awarded for litigation fees and expenses incurred prior to that date. This
is particularly true where, after summary judgment was denied and discovery
orders entered, Bove's counsel was allowed to retain an expert in March 2017,
and to proceed to an evidentiary hearing. Bove's counsel might have been hard-
pressed to surmise Bove's complaint was frivolous in light of this procedural
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and factual history. At any rate, because summary judgment was denied on all
but one of Bove's causes of action on April 19, 2016, we see no basis to conclude
Bove's attorneys violated the frivolous litigation rule as early as May 5, 2015 or
that they continued to pursue litigation frivolously in the months leading up to
the initial summary judgment ruling. Although some of the allegations made at
the outset of the litigation later proved to be unfounded, this outcome does not
render Bove's complaint frivolous. McDaniel, 419 N.J. Super. at 499. Nor does
the grant of summary judgment at the conclusion of the hearing, without more,
merit the imposition of sanctions. Ferolito, 408 N.J. Super. at 408.
Even if Bove's attorneys had litigated this unique matter in bad faith after
the initial summary judgment ruling in 2016, that distinction should have been
made and fees apportioned accordingly. LoBiondo, 199 N.J. 62 at 99. As we
find no indication that the trial court "backed out" fees or expenses prior to the
date of its summary judgment ruling in 2016, the award cannot stand.
It next bears repeating that the May 5, 2015 "safe harbor" letter made no
mention of the WCA's exclusivity bar, even though that bar was the basis on
which defendants prevailed. This lack of specificity constituted a failure to
properly alert Bove and his counsel to the alleged frivolous nature of B ove's
claim. Contrary to the position taken by defendants on appeal, even if a non-
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prevailing party does not complain about a deficiency regarding a safe-harbor
notice, the judiciary itself has an institutional interest in assuring that the safe -
harbor prerequisite to fee-shifting is strictly enforced. See Toll Brothers, 190
N.J. at 71 (noting that the safe-harbor mechanism helps preserve, among other
things, judicial resources). See also Trocki Plastic Surgery Ctr., 344 N.J. Super.
at 406 (holding that a plaintiff's failure to give "specific and detailed notice" of
the withdrawal provisions required rejection of the plaintiff's motion for fees
under N.J.S.A. 2A:15-59.1). The deficiency in defendants' "safe harbor" letter,
whereby it failed to specifically detail that Bove's claims were governed by the
WCA's exclusivity bar, provides an additional reason for reversing the trial
court's award of sanctions.
Lastly, we note that at no point in the trial court's December 13, 2017
opinion did it state Bove's attorneys acted in bad faith, even if it did find some
of their actions were "egregious." As we have indicated previously, a pleading
will not be considered frivolous for the purpose of imposing sanctions under
Rule 1:4-8 unless the pleading as a whole is frivolous. Moreover, sanctions are
not warranted if an attorney has a reasonable and good faith belief in the claims
being asserted. Without a finding Bove's attorneys acted in bad faith and with
no explanation as to why the trial court found the significant sum of $205,147.82
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36
was the amount needed to deter them from similar conduct, Rule 1:4-8(d), the
sanction is unsupportable. Accordingly, we reverse the order entering
judgments against plaintiff's counsel.
The remaining arguments raised by plaintiff's counsel do not warrant
discussion in this opinion. R. 2:11-3(e)(1)(E).
Affirmed in part and reversed in part.
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